Introduction - general overview

The Legal Framework

Under the FCA, section 605 prohibits the unauthorized interception and exhibition of radio communications, which has been interpreted to cover satellite transmissions of PPV events.

Section 553 focuses on unauthorized cable broadcasts. Joe Hand Promotions typically sues under both sections, depending on how the event was unlawfully intercepted and broadcast—via cable or satellite.

The key issue in these cases is the difference between a residential license and a commercial license. While residential consumers pay a much lower fee to view PPV events at home, commercial establishments must obtain a much more expensive commercial license to legally broadcast these events to their patrons. The rationale behind this pricing is simple: businesses can profit from increased foot traffic, food, and beverage sales during such broadcasts.

How Joe Hand Promotions Enforces Its Rights

Joe Hand Promotions typically uses a network of investigators to monitor businesses on event nights. These investigators visit bars, restaurants, and nightclubs, hookah bars, cigar lounges and other establishments, documenting unauthorized broadcasts by taking pictures, recording videos, and gathering evidence such as the number of patrons present and the number of TV's that show the fight. If a venue is found broadcasting without the proper license, Joe Hand Promotions will usually file a lawsuit.

The Structure of the Lawsuits

The lawsuits typically assert violations of the FCA under sections 605 and/or 553 and seek statutory damages. They may also allege willful copyright infringement.

Under section 605, statutory damages can range from $1,000 to $10,000 for each violation, and can be increased up to $100,000 if the violation was "willful" and for commercial advantage.

Section 553 allows for similar damage awards, though usually with slightly lower caps. The company often also seeks attorney's fees and costs, which can add significantly to the total amount a defendant might owe.

In most cases, the company argues that the violation was indeed "willful" because it is difficult for businesses to intercept PPV events "accidentally." They either use residential accounts, pirate streams, or use other illicit methods to access the event without a proper commercial license. In some cases, defendants have claimed ignorance or blamed independent contractors for the violation, but courts rarely accept such defenses.

Defendants' Options and Outcomes

Faced with the potential of paying thousands in damages, many defendants choose to settle out of court, often for sums between $2,500 and $25,000, depending on the severity of the violation and the size of the business and potential profits (looking at things like drink premiums and cover charges). Settlements allow defendants to avoid the risk of higher judgments and reduce legal expenses that would come with a federal court litigation.

For establishments that decide to fight the lawsuits, the burden is on them to prove that they had the necessary license or did not willfully engage in the illegal broadcast. However, given the clear documentation often provided by Joe Hand Promotions' investigators, winning these cases can be difficult.

Implications and Criticisms

While the aggressive enforcement strategy is effective in curbing illegal broadcasts, it has also drawn criticism. Many small businesses find themselves targeted and forced into expensive settlements even if the violation was unintentional or minor. Critics argue that the damages sought by Joe Hand Promotions often exceed the actual harm done and are used more as a deterrent than as fair compensation. Other complaints revolve around using ESPN+ to purchase the fight and showing it to some close friends at their bar.

Despite the controversy, Joe Hand Promotions remains a major player in the enforcement of broadcasting rights for PPV events. For restaurants, bars, and nightclubs, these lawsuits are a reminder of the significant legal risks involved in airing PPV events without the correct commercial license. Here is a case that discusses what happens if a business gets a demand letter and refuses to settle it, or get represented by a telecommunications law firm.

Texas Default Judgment Case

Joe Hand Promotions, Inc. v. AIH Alamo Ice House, LLC (W.D.Tex. Sep. 12, 2017, Civil Action No. SA-16-CV-843-XR) 2017 U.S.Dist.LEXIS 147857, at *1-3

Factual Background

Plaintiff held exclusive commercial distribution rights to the broadcast of the Miguel Cotto v. Canelo Alvarez telecast ("Program") nationwide on November 21, 2015. The Program broadcast originated via satellite uplink and was re-transmitted interstate to cable systems and satellite television companies via satellite signal. Plaintiff entered into agreements with various commercial establishments in Texas that allowed them, for a fee, to exhibit the Program to their patrons. Plaintiff allegedly expended substantial monies to market and transmit the Program to those establishments.

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Attorney Steve® Insight: One attorney for a different company told me these companies often invest "millions of dollars" to get the exclusive rights to license the fights. Because they risk so much money, they feel obligated to pursue unlicensed users, and may be contractually obligated to do so.

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Plaintiff alleges that Defendants did not contract with or pay a fee to Plaintiff to obtain a proper license or authorization to show the Program at the Alamo Ice House. Plaintiff alleges that Defendants willfully intercepted or received the interstate communication of the Program, or assisted in such actions, then unlawfully transmitted, divulged, and published said communication, or assisted in unlawfully transmitting, divulging, and publishing said communication to their patrons. Plaintiff alleges that Defendants then showed the Program without authorization, license, or permission.

Plaintiff alleges that Defendants pirated Plaintiff's licensed exhibition of the Program and infringed upon Plaintiff's exclusive rights while avoiding proper authorization and payment, and that Defendants acted willfully and with the purpose and intent to secure a commercial advantage and private financial gain. Plaintiff alleges that Defendants' agents, servants, and employees acted within the scope of their employment and authority at the time of the alleged wrongful conduct.

Plaintiff filed this case on August 24, 2016, seeking monetary relief up to $110,000 pursuant to 47 U.S.C. § 605, or, alternatively, up to $60,000 pursuant to 47 U.S.C. § 553. Plaintiff named as Defendants: (1) Alamo Ice House, LLC, under which the establishment at which the Program was allegedly shown operates; (2) Jaime Luis Gonzales; (3) Michael Brooks Kieschnick; (4) Charles Robison; and (5) Raymond Fuchs.

DAMAGES ANALYSIS

I. Legal Standard

There are three relevant damages provisions in 47 U.S.C. § 605.

• First, as a baseline, the statute allows for damages between $1,000 and $10,000 for violations of the Communications Act. 47 U.S.C. § 605(e)(3)(C)(i).
• The second provision gives the court the discretion to award additional damages “by an amount of not more than $100,000 for each violation” if the court finds “that the violation was committed willfully and for the purpose of direct or indirect commercial advantage or private financial gain.” 47 U.S.C. § 605(e)(3)(C)(ii).
• The final provision provides that the court “shall direct the recovery of full costs, including reasonable attorney's fees to an aggrieved party who prevails.” 47 U.S.C. § 605(e)(3)(B) (iii).

Attorney Steve® Tip: As you can see, the potential for a large damages award exists in every case as they will typically always argue that the unlicensed broadcast is "willful" and for the purposes of "financial gain."

II. Application Plaintiff seeks statutory damages in the amount of $10,000 against the remaining Defendants pursuant to 47 U.S.C. § 605(e)(3)(C)(i)(II).

Plaintiff's request for standard statutory damages:

Under Plaintiff's billing model, the licensing fee for a broadcast is based on the capacity of the establishment and varies for each event. Here, the establishment in question had a capacity of 370 people. To purchase viewing rights and legally broadcast the Program for this number of people, Defendants would have been required to pay $8,200. When calculating the amount of statutory damages, “[t]he Court finds it reasonable to treble what would have been the cost had Defendant followed the law.” Joe Hand Promotions, Inc. v. Garcia, 546 F. Supp. 2d 383, 386 (W.D. Tex. 2008).

This figure includes monetary savings resulting from the violation of the Communications Act, “as well as any profits made from food and drink sales associated with customers who stayed and watched the fight.” Therefore, because the amount Defendants would have paid had they legally purchased the rights to the Event was $8,200, the trebling of this amount would be $24,600. The statute caps damages under this section at $10,000. 47 U.S.C. § 605(e)(3)(C)(i). Accordingly, Plaintiff is awarded $10,000 under this section.

Plaintiff's request and argument for additional "enhanced" damages:

Section 605(e)(3)(C)(ii) allows for enhanced damages when the statute is violated “willfully for the purposes of direct and indirect commercial advantage or private gain.” 47 U.S.C. § 605(e)(3)(C)(ii). The Court previously found that Defendants “willfully intercepted or received communication of the Program or assisted in such actions by unauthorized transmission or receipt.” Further, “[b]ased on the limited methods of intercepting closed circuit broadcasting ... and the low probability that a commercial establishment could intercept such a broadcast merely by chance, however, courts have held [such] conduct ... to be willful and for the purposes of direct or indirect commercial advantage or private financial gain.” Entm't by J&J, Inc. v. Al-Waha Enters., Inc., 219 F. Supp. 2d 769, 776 (S.D. Tex. 2002).

The Court must balance the need to punish illegal piracy with the need to keep damages at a level that will not cause an insurmountable financial burden (reviewing multiple calculation methods and factors courts consider when assessing statutory damages under § 605). The Court finds damages for a willful violation in the amount of $30,000 appropriate based on the venue and willful actions by Defendants.

Plaintiff's request for costs and attorney fees:

The statute allows an aggrieved party who prevails to recover full costs and reasonable attorney's fees. 47 U.S.C. § 605(e)(3)(B)(iii). Plaintiff submitted the affidavit of Jamie King to establish the reasonable and necessary attorney's fees. Based upon the affidavit and the time spent preparing this case, the Court awards reasonable attorney's fees in the amount of $9,825. The Court declines to award attorney's fees and costs for future appeals.

The Court discusses joint and several liability

As to the question of individual Defendants' liability, the Court follows other courts' reasoning and finds the remaining Defendants—Alamo Ice House, Jaime Luis Gonzales, Raymond Fuchs, and Charles Robison—are jointly and severally liable for the entirety of damages awarded. See Cmty. Television Sys., Inc. v. Caruso, 284 F.3d 430, 436 (2d Cir. 2002) (“[W]e think section 605 is sensibly construed to create joint and several liability among those found liable for a single award of damages attributable to the purchase and installation of a single descrambler device.”).

The Court also finds the remaining Defendants are not entitled to an offset as to damages based on Plaintiff's previous settlement with Defendant Kieschnick. Under Texas's one satisfaction rule, “a plaintiff is entitled to only one recovery for any damages suffered.” Coastal Agricultural Supply, Inc. v. JP Morgan Chase Bank, N.A., 759 F.3d 498, 508 (5th Cir. 2014). A “nonsettling defendant may claim credit based on the damages for which all the tortfeasors are jointly liable,” but not for punitive damages. For the one satisfaction rule to apply, however, there must be a “single, indivisible injury.”

District Court for the Western District of Texas, states “other past claims, if any, including those unknown, and other negotiated consideration outside the claims and defenses specifically plead in this case.” Accordingly, the Court finds the one satisfaction rule does not apply to Kieschnick's settlement agreement, and the remaining Defendants are liable for the entirety of the damages awarded in this Order.

THE COURTS CONCLUSION

After review of all the evidence in this case, the previously issued findings of fact and conclusions of law, and the parties' latest briefs regarding damages, the Court awards Plaintiff $49,825.00 ($40,000.00 in total damages and $9,825.00 in attorney's fees). A separate judgment in favor of Plaintiff shall issue in accordance with Rule 58. Plaintiff is awarded costs and shall file a bill of costs in the form required by the Clerk of the Court, and with supporting documentation, within fourteen days of the entry of the Judgment. See Local Rule 54.

Watch Attorney Steve® Explain Boxing Piracy Damages in this Video

see video here.

These illegal broadcast cases can be very fact specific. Typically, these cases require an IP Defense law firm skilled and with previous experience handling these types of cases. We have seen cases where a litigation firm does little more than pour gas on the fire and force Defendants to litigate.